Popular Science Monthly/Volume 61/September 1902/A Year of Weather and Trade in the United States
| A YEAR OF WEATHER AND TRADE IN THE UNITED STATES. |
By Professor ROBERT DeC. WARD,
HARVARD UNIVERSITY.
THAT weather conditions affect trade and industry has long been known, but few studies of these relations have yet been made.[1] The hope of being able to determine, in a somewhat critical way, the dependence of trade and industry in the United States upon the general weather conditions from week to week, has induced the writer to give some attention to this subject for a year past. The sources of information have been the Climate and Crop Bulletins, and the Monthly Weather Review, of the Weather Bureau, and the well-known trade journals, Bradstreet's and R. G. Dun and Co.'s Review. The Weather Bureau publications emphasize the meteorological side alone; the two journals last named aim to present a true statement of trade conditions without any special prejudice in favor of meteorological controls.
The first summer month of 1901[2] began with decidedly cool weather east of the Mississippi River, and heavy rains in many eastern districts. This unseasonable weather was the key of the trade situation. Retail trade throughout the east was interfered with by the 'lack of sunny weather '; the growth of crops was retarded, and cotton and cereals were high. Manufacturers of umbrellas, rain clothing, rubbers and heavy footwear alone reported 'an exceptional demand.'
The second week of June was, on the whole, more favorable. In the east, where the temperatures were more nearly normal, there was an improved retail demand for summer wearing apparel, and this was also true of the northwest, where needed rains had 'quieted apprehensions as to the spring-wheat outlook.' The stimulation in trade in summer goods led to increased orders for fall merchandise. Dairy and garden products fell in price, as production increased with warmer weather. On the Pacific coast, the third week of June averaged decidedly cool, and trade was retarded in consequence. At a number of cities situated in a district where the average daily temperature excess was 3°-6°, the 'warmer weather created a demand for summer goods,' while over the Plateau the average daily deficiency of temperature was 6°-ll°, and there were unfavorable effects of the cool weather. These are interesting examples as showing, in degrees, what excess or deficiency of temperature stimulated or depressed trade in this particular case. In the Middle South Atlantic States, where there were exceptionally heavy rains, corn suffered from lack of cultivation, and trade was checked.
During the latter part of June, and in July, large sections of the United States east of the Rocky Mountains suffered from prolonged drought. Record-breaking temperatures were observed at a large number of stations, readings of 100° and above occurring in many places for several days in succession during part of the month. The daily temperature excess frequently reached 5°-10°, or more. During this long spell of hot weather the rainfall was markedly deficient over many sections east of the Rocky Mountains, and hence there resulted a drought of far-reaching extent. About the midde of July, corn began to suffer severely. Locally, some damage was done to wheat and to oats, while cotton was also injured over considerable sections of the South. Occasional local rains helped to make good part of the damage to corn and cotton. The chief interest, so far as crops were concerned, centered in the condition of corn.
The first effect of the extreme heat, and one that lasted through July, was a marked stimulation of retail trade in summer clothing of all kinds, straw hats, sporting goods, and the like. The continuance of the heat over much of the country had the effect of carrying the sale of summer goods beyond the usual time. Another effect of the hot weather—and this an unfavorable one—was the curtailment of almost all branches of trade other than that in summer goods. A report from Boston, to the effect that 'buyers were few, and only necessities prompted purchases,' puts the case clearly enough. The decrease in 'shopping' led to an increase in orders by mail. The intense heat was, however, not necessarily adverse to general retail trade, provided crop prospects were favorable. This was clearly brought out in such reports as one from St. Louis, where trade 'was sustained by the result of the wheat harvest.' On the other hand, trade may not respond immediately, even when crop prospects are bright, for when the weather is fine, and farmers are busy in the fields, they have no time to go to town to trade.
The heat of the first week of July 'caused a practical suspension of industrial activity in many cities.' Numerous prostrations from heat caused humane employers to close their mills during the most distressing hours, thus somewhat restricting the output. In regard to the effect of the weather upon the steel-workers' strike in Pittsburgh, one of the trade journals reports that the striking employees were 'mostly content to take a rest during the hot weather,' and consequently were not so anxious that a settlement should be reached.
During the second week in July, business was reported as of a 'midsummer character' i. e., normal, in the east, and here the temperatures for the week were nearly, or even slightly below, normal. The statement from Louisville is representative: 'A few recent days of nominal summer weather have given a spurt to retail trade.'
The third week of the heat and drought affected not only the trade of that particular week, but led to the cancellation of many orders previously given. These cancellations came from the drought-stricken districts, and were naturally a disturbing factor in the trade situation in many Western and Southern cities.
The week ending July 22 brought local showers over portions of the drought-stricken districts, and although these showers were in most cases but scattering, there was a noticeable improvement in crop outlook and business in the sections where the rains fell. A characteristic report from St. Louis (July 19) stated emphatically that 'the business situation hinged upon the question of rain.' During the week ending July 29 also, 'advices of lower temperature and moderate rains came as a great relief to business throughout the country.'
The cattle, meat, dairy and produce markets all showed marked effects of the excessively hot weather. At the very outset, the perishable nature of butter and eggs, and the shortened milk supply, caused a rise in price, which was well maintained. A number of sugar-of-milk factories shut down. Fruits and vegetables became scarce, and advanced in price. Consequently there was a great demand for canned goods, the price of which at once tended upward. This demand continued strong for many weeks, and had it not been for the drought, the year 1901 would have been a poor one for packers and jobbers of canned goods, because they had carried over a very heavy supply from the previous season. The decreased sales of fresh meat during the heated term caused an advance in the price of hides at Boston.
The drought and consequent lack of pasturage in the southwest led to record-breaking shipments of cattle and hogs to market at Kansas City, the receipts for the month exceeding those for July, 1900, by 263,000 head. This extraordinary rush of live stock resulted in an over-supply of young cattle. Buyers dictated prices. The situation in the hide market was much complicated. Tanners were able to hold down the price of hides. Smaller requirements in the way of corn for fodder, and restricted subsequent arrivals of cattle, were expected.
Of all the economic aspects of the heat and drought of July, the greatest interest attaches to the prices of stocks and cereals. During the second week of July, reports of heavy damage to corn and oats in the Missouri valley belt caused the market to 'break badly.' The heaviest declines came in the stocks of railroads which were likely to be affected by a partial failure of the corn crop in the southwest, such as the Atchison and the Rock Island. Reports that rain was likely to fall in Kansas caused a rally from the low figures. During the week ending July 20, in spite of the short corn crop, the large wheat yield made it evident that the cereal production of the west as a whole would furnish abundant traffic for the railroads. The appearance of rain in parts of the west led to considerable repurchasing of railroad stocks by capitalists who had sold Granger and Pacific stocks on the unfavorable crop outlook of two weeks before. Atchison common stock rose ten points; Rock Island was a very strong feature, 'and the Grangers generally responded promptly to the improvement in the corn-crop outlook.'
The highest non-corner prices for corn since 1894 were paid during the week ending July 27. The damage to crops in the territory tributary to the Union Pacific in Kansas and Nebraska 'raised strong doubts as to the possibility of any increase in the four per cent, dividend on the common stock.' Union Pacific was one of the most prominent stocks in volume of transactions, and sold down very sharply from 1041⁄2 to 9311⁄2. St. Paul fell from 164 to 1521⁄2, and the other Grangers were similarly affected.
Under the influence of the extreme heat, summer travel was reported as the heaviest in years; this gave the transportation interests large earnings, while the hotels and stores in sections frequented by summer visitors did an excellent business. Much money was left in summer resorts, and collections there were consequently good during succeeding months. While the carriage of wheat and of live-stock by the Granger roads during July was very heavy, the shipments of oats and corn fell off sharply, the movement of corn to seaboard points declining 72 per cent, as compared with that in July, 1900. Foreign commerce was seriously affected. In Scotland, Russian and Algerian maize practically supplanted American corn. The heat interfered with building, so trade in paints, oils and other building requisites was checked. Meats were in less demand, and wholesalers in some cases reduced prices in order to move fresh meats in storage. The hot weather was unfavorable for the curing of fish. The consumption of milk increased, and there was a scarcity in many cities. The demand for ice was so great that there was difficulty in chartering vessels in which to ship ice from Maine.
After about a month of intense heat and of drought, lower temperatures and good rains were experienced over most of the drought-stricken districts. The relief to trade was immediate and general. In the great corn States, more than usual of the year's crop had been planted late, and this late corn improved greatly, although early corn was practically ruined. A large spring-wheat crop was assured by the rains. Cotton-crop conditions at the south were also improved, and trade reports were consequently more cheerful from southern cities. An abundance of forage supplies was now certain. The western farmers regained courage; the rush of cattle and hogs to market stopped. The pressure in this line being removed, many of the cattle which had been sent to market were not slaughtered, but were kept to be fattened. Hence a great accumulation of skins was no longer expected. The most unfavorable trade reports naturally came from the central west and southwest, where the loss from drought had been greatest. Kansas City, however, reported that anxiety had been followed by 'a feeling of relief and hopefulness.' Cancellations stopped, as country merchants took new courage. July bank clearings at Kansas City were the largest on record, because of the heavy receipts of cattle and hogs, but for the country as a whole bank clearings for July were adversely affected by the heat and drought. Fluctuations in corn continued, as conflicting reports of greater or less loss were given currency. Good spring-wheat reports, and liberal arrivals at interior cities, weakened prices of that staple. Cotton was weaker, owing to the arrival of needed rains.
While the tide of trade turned distinctly after the drought, and there was a generally cheerful tone everywhere on account of the seasonable weather and favorable crop outlook, the heat and dry weather continued to affect trade in various ways for many weeks. The shortage in corn and potatoes led to an increased demand for rice, and trade in canned goods and dried vegetables was stimulated by the scarcity of fresh vegetables and fruit. In the southwest, especially, the scarcity of fruit and vegetables gave the local commission houses a large business in fruit and produce. Meats and dairy products remained high, 'partly owing to the fear of smaller supplies later in the season, due to the early marketing of young and unfattened stock,' and partly because of the high price of corn. As late as September 7 nearly all the lumber mills in Oregon closed down on account of the unsatisfactory condition of the market resulting from the crop shortage in eastern sections.
The special feature of the week ending August 17 was the effect upon southern trade of a West India hurricane, which gave very heavy rains over some of the southern states, and on the Louisiana coast alone did damage to growing crops, chiefly rice, estimated at $1,000,000.
At the end of the second week in September, with the coming of cooler weather, summer travel fell off decidedly in Maine and elsewhere, and retail trade in many of the larger cities improved with the return of the summer absentees.
Abnormally cool weather, with local frosts, prevailed east of the Rocky Mountains during the week ending September 21. Corn, cotton and dairy products advanced in consequence. The immediate effect of these lower temperatures was to stimulate the demand for fall and winter supplies at cities situated in the region of maximum temperature deficiency. Coal and stoves became active. While the greater part of the country was unusually cool, the North Pacific coast averaged slightly warmer than usual. And we note that retail trade at Portland, Ore., was quiet because of the 'continuance of summer weather' Railroad earnings in September were adversely affected by the lessened grain movement in the west, and by the damage done by the hurricane on some of the southern railroads.
October was warmer and drier than usual throughout nearly the whole country. This being a month when cool weather is needed for 'seasonable trade,' the keynote of the month may be found in the statement that where cool, trade conditions were good, and coal, furs, winter clothing, stoves, liquors, etc., were active, and where abnormally warm, retail merchandise distribution was retarded, but the handling of crops, and outdoor work, including building, were helped. The later on in October the warm weather continued, the more unfavorable were its effects on 'seasonable trade.' Towards the end of the month, hot weather interfered with the 'kill' of cattle, and caused a scant offering of hides; hence prices held well. The shortage in freight cars, which was a conspicuous feature throughout October and the following months, did not cause any serious inconvenience in the case of coal, because of a small demand due to the high temperature. Failures for October showed an increase in the south, where the backward state of cotton checked trade and delayed collections.
The colder weather of November stimulated trade in heavy clothing, shoes and groceries, and caused an increased demand for oysters and for coal, but rubber footwear was quiet throughout the month, owing to dry weather. The cold weather also started the tide of winter travel to California. Eggs rose in price. At the south, the backward cotton crop was a check to trade. A warm wave during the second week of November checked retail demand in the lower Mississippi Valley, and thence east to the Atlantic Ocean, the depression in trade accompanying the warm wave in its eastward progress. The car shortage in the east, already referred to, was complicated by the unusual movement of corn and oats west to the drought-stricken states, but it was seen that lower temperatures would relieve the situation by stopping lake transportation, and restoring thousands of cars to inland traffic. Abundance of snow in Maine at the end of November facilitated lumbering and caused a demand for sleighs, and distinctly colder weather put the market for anthracite on a firm basis.
Between the 14th and 19th of December, the minimum temperature records for the second decade of that month were broken in all districts from the South Atlantic and Gulf coasts northwest to the upper Mississippi and Missouri valleys, including the middle Rocky Mountain slope and the Ohio Valley. There were also very heavy rains in eastern sections about the middle of the month. The exceptionally cold weather immediately stimulated retail trade in winter goods in many places. Eggs, poultry and potatoes advanced. In the New York stock market, the cold gave strength to the anthracite group of railroads, because it was certain that coal consumption would increase at once, but floods in the mining regions of Pennsylvania curtailed the coal supply, interfered with transportation, and cut down railroad earnings. Building was interfered with by the cold, and the receipts of wheat fell off because of the interruption of railroad traffic. As regards railroad earnings for 1901 as a whole, the southwestern roads were unfavorably affected by the poor corn crop, and the southern roads by the late cotton crop.
January was mild and generally dry, especially during the first two decades, but closed with ample snow covering over the winter-wheat states. Retail distribution of heavy clothing, boots and shoes, and rubber goods, was checked by the mild weather, and the loss of snow retarded lumber operations. The high temperature, however, stimulated the demand for spring goods at wholesale, and building, and the demand for building materials, were active. The snows of the end of the month were favorable for winter-wheat, and furnished water for cattle, and therefore improved the tone of the stock market, especially in the case of northwestern securities. But these same snows interfered with transportation interests and with trade, except that in winter clothing and rubber footwear. The future, as one trade journal had it, profited at the expense of the present.
During the first two weeks of February, snow obstructed traffic by railroads, cutting down receipts of live stock, corn, wheat and coal, and causing the banking of mills and furnaces because of lack of coal. Country roads were blocked, and country merchants were kept away from town. This increased orders by mail. Farmers could not reach their banks, and this interfered with the free circulation of money. During the second week of February, it was reported that as a result of the long drought in the southwest, water was scarce, and railroads had to haul it a hundred miles in places. At St. Louis, 'local retail trade was decreased by reason of the dangers of ice-covered sidewalks and streets.' Loaded car movement at St. Louis and Indianapolis was below that for preceding years, snow blockades throughout the west and north having compelled the railroads to reduce the number of cars per train. There resulted a notable decrease in Atlantic exports of flour, and a crowding of side-tracks at division points with loaded cars waiting to be moved.
Heavy snow and sleet storms during the last week of February did great damage to telegraph and telephone wires in some of the large eastern cities. Mail and transportation facilities were seriously interrupted. Stock exchange transactions in New York and other cities were limited to local orders, and this restricted sales. Trade in overshoes and rubbers was larger during this week than for the two preceding months. Floods and high water interfered with iron and steel production, with transportation interests, and with the coal output. The crippling of the railroads, which caused an unusual demand for structural materials, was noticed by 'the street,' but had little effect except upon the anthracite stocks, although March earnings were cut down by the February snowstorms.
Mild weather in the northwest early in March, and later on in the east, prevented loggers from getting out their entire cut, and led to the breaking up of many camps. By the middle of March the sidetracks were being cleared of the cars stalled there by the February storms; shut-down mills were running again; the advent of spring weather acted as an important stimulant to most lines of trade and industry; butter and eggs were lower; the demand for building materials increased, and weather reports regarding wheat began to claim careful attention. According to one trade journal, 'each cloud is telegraphed as heralding copious rains, while a ray of sunshine means drought.' The injury to crops during the summer of 1901 made stocks peculiarly sensitive to indications of drought. During the week ending March 22, the most severe cold wave and snowstorm of the month caused cattle losses in Dakota which were estimated at 2-5 per cent. Milder weather soon followed, and somewhat relieved the strain on the coal trade.
The opening of lake navigation in April began greatly to facilitate traffic at the north. The week ending April 26 was one of contrasts. Heavy snows interfered with farm work in Montana, the Dakotas and Minnesota, while hot winds in the central valleys and middle Atlantic States brought unusually high maximum temperatures, which were detrimental to crops. In consequence, weather reports had more influence than usual in shaping the prices of cereals, which advanced until reports of general rains in the southwest caused a decline of 2 cents a bushel on wheat. The 'versatile' weather of the week produced erratic fluctuations in the security and cereal markets.
Much was heard during the spring of 1902 about the high price of beef and of other meats. These high prices were at least partly due to the large cattle receipts of the preceding fall, there being little inducement to carry stock through the winter, with corn at 60 cents a bushel instead of 20 or 30 cents. The high price of beef led to the consumption of pork products, poultry, etc., which depleted supplies and raised prices in these lines. The natural consequence of a short corn supply was thus seen to be higher prices for cattle and hogs.
During the first week of May, nearly the entire country east of the Rocky Mountains had highly favorable temperature conditions, but the unsettled crop conditions in the southwest were the reason of a failure to give much support to Missouri Pacific and Atchison stocks. Throughout May unusually heavy rains. in the northwest retarded farm work and interfered with trade there. During the week ending May 24, Chicago, where the average daily temperature excess was 12°, reports 'the feature in the drug trade was the increased call for soda-water supplies caused by the hot weather. 'The coal strike, which had begun to attract considerable attention, was much less of a burden on the general public than it would have been if the weather had been cooler.
The examples above given, which are but a few of those that are available, show clearly enough something of the effects of the weather upon trade, industry and financial transactions. No attempt has been made to estimate the financial loss or gain due to the weather conditions of any single week, or month, or of the year as a whole. Approximate estimates of this kind can be, and often are, made in individual cases, as in the case of the damage done by some storm to crops or to transportation interests in some particular section, or in that of the money value of one rain to cereals, fruits and vegetables in a time of drought. But it has seemed to the writer that no useful purpose could be served by attempting, in the present article, to make any such rough estimates as are alone possible.
The principal object of this investigation was to ascertain, if possible, whether the relation between weather and trade could be expressed in fairly exact meteorological terms. In order to study this subject, the Weather Bureau charts showing the weekly (or, in winter, the monthly) temperatures and precipitation, and the departures from the normal temperatures and precipitation were used. On these several charts the stations were located at which trade was reported as having been affected by the weather. Cities where trade had showed effects which were ascribed to the temperature were noted on the charts showing departures from the normal temperature, a sign being used in each case to show whether the effect was beneficial or otherwise. Cities where the reports indicated favorable or unfavorable effects of precipitation were noted in like manner, on the charts showing the departures from the normal precipitation. In some weeks there was found an extraordinary agreement, the good effects of 'seasonable' weather upon trade being found at cities situated within, or close to, districts of normal temperature or precipitation, while the unfavorable effects of excessive or deficient temperatures were indicated at cities within districts of too high or too low temperature, respectively. Similarly, the depressing effects upon trade of too much, or too little, precipitation were found in those portions of the country where there had been an excess or a deficiency of rainfall. So close were these relations in some weeks that it was possible to state in degrees, or in inches, the amount of the excess or deficiency of temperature or of rainfall which were needed to stimulate or to depress trade (e. g., the third week in June; and the weeks ending September 21 and April 14). So close an agreement is, however, exceptional. A careful study for the year in question of all the trade reports in which mention was made of weather control, and a close comparison of these reports with the temperature and rainfall charts, failed to give any such exact results as were hoped for.
The final outcome of this consideration may be briefly stated as follows: As the result of the experience of many years, trade is in a condition of such very close and delicate adjustment to the average weather of any particular month, or even week, that 'seasonable,' i. e., normal weather, other things being equal, usually means 'seasonable' trade. The case is not unlike that of a row of card houses which, when left undisturbed, i. e., under normal conditions, stand, but when interfered with by any unexpected or abnormal influence, fall down. Thus, when meteorological conditions are unseasonable, trade at once reflects the change, and suffers. Trade is, however, subject to many and widely-varying controls; hence the problem of the particular controls which affect it in any one week is a very complex one, and the key is not always, or sometimes even at all, to be found in local weather conditions. The trade of a city is often largely dependent upon orders coming from a distance. Hence, although the weather in the city may be unfavorable, and local trade depressed, orders from the tributary district may suffice to overcome this depression, and keep trade up to its usual standard, and vice versa. Again, while seasonable weather promotes active trade among the inhabitants of a city, the farmers round about may take advantage of this opportunity to work in their fields, and trade in the country districts suffers because the farmers are too busy to make purchases. Furthermore, the relation between temperature and precipitation on the one hand, and crops on the other (and hence, indirectly, the control of weather over trade) cannot be expressed in any simple way. This is partly because the effect of the weather of any one week upon crops, and upon trade, depends largely on the weather of the preceding weeks. Thus, if there has been enough rain, high, or even unusually high, temperatures may be needed to promote the growth of crops, while on the other hand, if the rainfall has been deficient, high temperatures may be very injurious. The proper distribution, in time and in amount, of temperature and precipitation in their relation to crops is a subject which itself still needs much careful study.